KKR to Acquire Flextronics’ Software Development and Solutions Business

Acquisition is KKR’s First Investment in India

Menlo Park and Palo Alto, California, April 16, 2006 – Kohlberg Kravis Roberts & Co. (“KKR”) today announced that an affiliate of KKR has signed a definitive agreement to acquire the software development and solutions business (“the software business”) of Flextronics International Ltd. (NASDAQ: FLEX) in a transaction valued at approximately $900 million. Flextronics will retain a 15% equity stake in the software business and continue as an important business partner and customer.

The software business is headquartered in Palo Alto, California, with operations located predominantly in India under the banner of Flextronics Software Systems (“FSS”). The business is unique in its ability to deliver communications solutions that stretch from the network infrastructure to end user devices. As a key research and development partner to top tier communications companies worldwide, the business has developed a sophisticated global delivery model. Comprised of a software solutions group and a strategic design consulting group, the business is experiencing rapid growth and has approximately 6,100 employees worldwide. In addition to operations in the United States and India, it has a significant presence in Eastern Europe.

Following completion of the transaction, CEO Ash Bhardwaj, FSS President Arun Kumar, and the existing management team will continue to lead the software business. It will operate under a new name, which has yet to be selected.

The acquisition is KKR’s first investment in India and second investment in Asia, following its 2005 investment in Avago Technologies, the former Semiconductor Products Group of Agilent Technologies. It is also believed to be the largest leveraged buyout and technology investment in India to date.

Adam H. Clammer, a Member of KKR, said, “Our investment in Flextronics’ software development and solutions business is an outstanding opportunity to create value in a high-growth sector. Led by a world-class management team, the software business has an unmatched record of success in the delivery of communications technology. We believe the business is well positioned to build on the strong foundation it has developed in its markets.”

James H. Greene, Jr., a Member of KKR, added, “This transaction demonstrates the strength of the global investment approach KKR has developed in recent years. In executing this transaction, we leveraged the resources of our worldwide franchise. KKR is excited about the software development and solutions business and the expansive market it addresses.”

Ash Bhardwaj, CEO of the software business, said, “This transaction is a positive development for our customers, employees and stakeholders. KKR is the world’s premier private equity investment firm, and its interest in our business validates what we have accomplished and our significant potential. As a standalone business, we will be better positioned to further develop our service and product offerings, and expand our customer relationships. We look forward to collaborating with KKR and to our continued relationship with our colleagues at Flextronics.”

KKR will finance the acquisition with fully underwritten debt facilities. Citigroup Global Markets (Asia) and Merrill Lynch are acting as Joint Bookrunners and Joint Lead Arrangers for the acquisition financing.

Completion of the transaction, which is expected in the summer of 2006, is subject to regulatory approvals and customary closing conditions.

Citigroup Global Markets and Morgan Stanley acted as the exclusive financial advisors to KKR on the transaction and Simpson Thacher & Bartlett LLP served as legal counsel.

About KKR:
KKR is one of the world’s oldest and most experienced private equity firms specializing in management buyouts, with offices in New York, Menlo Park, California, London, Paris, Hong Kong and Tokyo. Over the past year, KKR has committed more than $1 billion to technology businesses, including SunGard Data Systems and Avago Technologies, which are considered the two largest private equity technology investments in history, with transaction prices of $11.8 billion and $2.8 billion, respectively. Past KKR technology industry investments include: Amphenol, RELTEC, Wincor Nixdorf, Tenovis and Zhone Technologies. Over the past thirty years, KKR has invested in more than 140 transactions with a total value of US$193 billion. For more information, please visit www.kkr.com.

About Flextronics’ Software Development and Solutions Business:
Flextronics’ software development and solutions business is the leading provider of high impact, innovative software solutions to the global communications industry. Customers for its full spectrum offering of software services, software products, and strategic design consulting are the world’s leading communications companies. The software business has the unprecedented ability to deliver complete software solutions that stretch from network infrastructure to end user devices. In addition to its operations in India and the United States, the business has locations in China, Germany, Italy, South Africa and Ukraine.

Back to Press Releases 2006